One of the assumptions behind the plan for elected mayors seems to be that it would increase democracy and improve the quality of the people who run our cities.

What are the options in Birmingham?

Sion Simon would have us believe he gave up his place as Labour MP for Erdington so he could run for mayor of Birmingham – a decision he made even before there was officially a vacancy.

He could be challenged for the Labour nomination by the veteran group leader Sir Albert Bore.

Mike Whitby, who has been council leader for the last six years, must be in with a chance but Tory leader David Cameron says he wants someone outside politics to do the job.

That means ex-lawyer Digby, Lord Jones of Birmingham, must be in with a shout. He was briefly in the Labour Government but somehow managed to avoid joining the party.

Apparently the suggestion is he stands as an Independent. But would the other parties give him a free run? And, if they did, where’s the democracy in that?

Before they can vote for any of these potential candidates, the electors must first decide if they actually want elected mayors.

Without real reform of the whole system, it must be questionable whether it’s worth it.

Will mayors really have any clout? Most Governments – including this one – talk about devolution and localism but when it comes to parting with cash or power, they decide Whitehall knows best after all.

Councils are told how to spend their money. It goes on schools and social services mainly. That won’t change.

And what is the point of supposedly powerful mayors being kings of their little castles when the Government is also setting up Local Enterprise Partnerships which will cross council boundaries?

Mayors won’t want to see their influence diluted by dealing with these new quangos.

The Coalition is feverishly trying to paper over the cracks emerging from its decision to axe development agencies like Advantage West Midlands by introducing LEPs.

These supposedly business-led bodies will die of neglect if elected mayors take over the big cities.

What self-respecting captain of industry would want to devote time and energy to them when the mayor of the biggest place on the map is too busy to be bothered?

No doubt all this is the result of Mr Pickles’ time as leader of Bradford Council, where he manipulated a hung council to ensure the Tories clung onto power.

The one-time “Beast of Bradford” thinks he’s giving us radical reform. Sounds more like pickled red herring to me.

Wednesday, December 08, 2010

The good news is the economy is growing nicely, spending cuts are not as bad as feared and the Chancellor is talking about tax reductions for big businesses.

The bad news is that nobody's noticed and small businesses are still going to the wall with the Government mainly responsible for the bankruptcies.

Economists tell us they see green shoots of recovery springing up everywhere but most business people think it still feels like bleak mid-winter.

That, I fear, is because economists look at trends over months and years while businesses look at what happened yesterday and the day before.

Official statistics show a drop of 17 per cent in company insolvencies. That sounds like good news, even when you discover that 58 per cent of all winding-up orders come from Her Majesty’s Revenue and Customs.

Alas, the taxman has been bailing out hundreds of companies for a couple of years under its “time to pay” scheme.

The taxman has been holding off asking for the money. It’s now telling companies to pay up the money they owe.

Unfortunately many of them are “zombies” – they look as if they’re still alive but as soon as they have to repay their debts, they’re dead.

True the economy isn't as dire as it was two years ago when the banks looked like they might disappear completely, taking the entire capitalist system with them.

For an economist looking at his graphs and charts, that means things are improving.

For ordinary businesses, it just means utter destruction has been replaced by a never-ending fight for survival.

The Christmas spending binge may be a bit better than last year – but only because the increase in VAT to 20 per cent on January 1 will encourage some people to buy sooner rather than later.

It means sales in the New Year will get off to a slow start. On top of that, public spending cuts are only just starting to bite.

Job-losses in the public sector, we are told by the Office for Budget Responsibility, won't be as high as forecast.

They'll still be huge. Birmingham Council, for instance, announced this week it was axing 7,000 jobs.

To judge the scale of that, remember there’s only one private sector company in the whole city employing more than 7,000 people in total – and that's RBS bank which is actually owned by the taxpayer as well.

And when councils or Government department wield the axe, they start with their private-sector suppliers.

There are thousands of small firms which rely on work from the public sector for their livelihood. That work will, in many cases, dry up completely.

When it doesn't, they face a serious price squeeze. Either way, it makes for grim prospects.

Confidence, we are repeatedly told, is the key. If only businesses had the confidence to expand and consumers had the confidence to spend, all would be well.

But faced with tax rises, spending cuts and the turmoil in the eurozone – where entire countries are teetering on the edge of bankruptcy – it's hard to feel positive.

The Coalition Government is taking heart from the latest surveys saying the economy will carry on growing next year.

It is a vindication of Chancellor George Osborne's decision to get his cuts in as fast as possible.

However unpleasant they may be, at least it means we won't go the way of Ireland, Greece, Portugal and even Spain by begging for help from the EU and the International Monetary Fund.

No wonder that, according to one of the many hilarious WikiLeaks we have enjoyed recently, Bank of England Governor Mervyn King was worried about the inexperience of Mr Osborne and David Cameron.Mr King is probably right they hadn’t “fully grasped the pressures they will face from different groups when attempting to cut spending”.Even after the cuts, total Government debt will carry on rising until 2015 when it’s due to hit a staggering £1,300,000,000,000 (we’re talking over a trillion).

The Governor knew we needed to stave off national bankruptcy – but that's no consolation for small businesses.

Already they can see a drop in demand, consumers switching to cheaper goods or saving rather than spending. Even big corporations are now sitting on money rather than investing it.

It doesn't make good economic sense to save when interest rates are low. Savers lose out whereas borrowers get money on the cheap.

But everyone’s nervous. We don't like debt any more. We want cash for a rainy day. It's called lack of confidence.

I was talking to a businessman who does corporate finance deals. He says things are looking up. Investors have money and companies are looking to expand.

To prove it, he told me about one big deal he's working on. The company involved thinks there's a lot more work it can land in the New Year and wants a cash injection to help it grow.

This was excellent news, I thought. At last, signs of life in the economy.

What does the company do? I asked him. He told me: They're insolvency experts.